John Phillips, HUD's acting director for California, Arizona, Nevada and Hawaii for the past year and an agency employee in San Francisco for more than two decades, was ordered in December to run the Los Angeles HUD office for at least two months. Until becoming acting director, Phillips had been the Pacific/Hawaii region's No. 2 official and thus up the chain of command from the Los Angeles operation.

Phillips declined to discuss his transfer. But his wife said she believes it is retaliation for a memo he wrote to his bosses Nov. 2 criticizing HUD's "alarming" handling of a plea bargain involving former San Francisco Housing Authority Director Ronnie Davis, who recently pleaded guilty to taking excess compensation from a Cleveland housing agency where he once worked.

"I'm thoroughly demoralized. I'm married to a man who's devoted his working life to an agency, and it's really hard to feel that this isn't punitive at some level," said the Rev. Joan Hull, a retired minister with the Unitarian Church of San Francisco. "It was done so abruptly and so rudely."

The plea deal Phillips criticized dismissed felony charges against Davis and promised that HUD would halt disciplinary actions arising from audits that accused Davis of mismanaging public money in San Francisco and Cleveland. The deal also allowed Davis to have a public-housing management role again.

"The plea bargain has added weight to charges in San Francisco that the department tolerates corruption in San Francisco," Phillips wrote in his memo. "The way we handled this raises serious questions . . . about the department's ability to communicate a clear and consistent message against Housing Authority mismanagement and corruption."

Phillips addressed his memo to Alphonso Jackson, HUD's deputy secretary, who was traveling yesterday and did not return calls.

Shortly after Phillips' transfer, Jackson was the guest of honor at a City Hall party hosted by Mayor Willie Brown, who has stuck by Davis and maintained he improved the city's public housing.

Brown's spokesman P.J. Johnston said yesterday that he didn't know anything about Phillips' transfer and that the mayor hasn't been involved with HUD's handling of Davis.

HUD spokeswoman Nancy Segerdahl said Phillips was not being punished. "If there is any suggestion whatsoever that there's some sort of linkage between this memo and the reassignment, that would be completely wrong," she said.

Hull said her husband learned of his transfer Dec. 3 from officials in Washington, who told him "in a very peremptory fashion with no explanation" to report for work in Los Angeles within two days.

Hull said her husband was told the assignment would last at least 60 days. Phillips has been flying down during the week and staying in a hotel at HUD's expense, returning on weekends, Hull said.

Since Phillips' transfer, the office has been run by Lily Lee, a HUD manager from Washington, D.C. She said yesterday was her last day and that an appointee of President Bush, Richard Mallory, would take over Monday.

The office had been run under the Clinton administration by Art Agnos, a former mayor of San Francisco.

As to whether Phillips' transfer was retaliatory, Lee said: "I don't attempt to see how people perceive things."

Phillips' memo to Jackson focused on the Oct. 29 plea agreement that HUD and the U.S. attorney's office in Cleveland reached with Davis. Under it, Davis pleaded guilty to a misdemeanor charge of knowingly failing to prevent the Cleveland housing agency from paying him twice for benefits when he left for San Francisco in 1996.

Davis, who agreed to repay $5,467, is expected to be sentenced Feb. 26, after which he has agreed to testify in the trial of his old boss, who still faces charges of stealing public money.

Both HUD and federal prosecutors in Cleveland tried unsuccessfully to back out of the plea bargain after the U.S. attorney's office in San Francisco complained that it was never consulted about the deal, which also gave Davis immunity from prosecution regarding his employment in San Francisco and Cleveland. Last month, a federal judge ruled that the deal would stand.

Davis has not been charged with any illegal activity in San Francisco, but HUD auditors strongly suggested that his administration submitted a forged document to them. Davis was accused of similar misconduct in Ohio, where a woman testified that he was instrumental in creating a letter authorizing the use of public funds to pay his boss' mortgage. Three housing authority commissioners testified that signatures on the letter were not theirs.

Davis has denied wrongdoing in both cases.

The San Francisco Housing Authority this week also agreed to pay $320,000 to two employees who said they had been punished for speaking out about corruption while working under Davis. Former eligibility manager Carmen Rosales said Davis ignored her warning that housing benefits were going to people who were ineligible.

Under the settlement, the Housing Authority admitted no fault. Rosales' suit uncovered evidence that led to the conviction of 21 people, including two agency employees, for participating in a bribery scheme involving the sale of public housing benefits.

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